Mergers create uneven playing field

The death of numerous dotcoms and the consolidation among the survivors have concentrated the most popular Web destinations into fewer hands.

In North America, home to the world's largest Internet audience, just four companies control the sites that get half the Web traffic.

Steve Yap, communications director with Interactive Audience Measurement Asia (iamasia), said the trend had spread to the mainland, where the three leading portals - Sina.com, Sohu.com and Netease.com - accounted for 32.5 per cent of the time people spent on the Web.

'The landscape is dominated by a few major players. Sites controlled by the big three players were visited by 72.5 per cent of all home Internet users in urban China during March,' he said.

In Hong Kong, iamasia found that the sites controlled by five organisations - Yahoo!, Microsoft, Pacific Century CyberWork, the Hong Kong University of Science and Technology and Next Media - were visited by 91 per cent of the home Internet users, accounting for 27 per cent of the time people spent online.

In the United States, the concentration is even more pronounced.

According to research house Jupiter Media Metrix, four companies - AOL Time Warner (32 per cent), Microsoft (7.5 per cent), Yahoo! (7.2 per cent) and Napster (3.6 per cent) - account for half of the 72 billion minutes Americans will spend online this year.

No other company attracts more than 2 per cent of the total. Auction site Ebay, for example, had a 1.9 per cent share while entertainment conglomerate Walt Disney Internet Group only achieved 0.8 per cent.

There was an 'irrefutable trend towards online media consolidation and the playing field is anything but even', said Aram Sinnreich, senior analyst for Jupiter.

'The Internet may provide an opportunity for players like Microsoft or Yahoo! to become serious media companies, but so far a major share of the market is being absorbed by a handful of companies, with those same companies continuing to direct traffic across their own networks of sites.'

Jupiter found 14 companies owned the sites that accounted for 60 per cent of the time spent online. During the dotcom boom in March 1999, it took the combined traffic of the top 110 companies to lay claim to that level of domination.

According to Jupiter analysts, recent mergers have turned already-powerful companies into 'media behemoths'.

They said that in March 1999, the then separate companies of AOL and Time Warner were already ranked No 1 and 11 respectively. Today, AOL Time Warner, the product of their merger, gathers four times as much Web traffic as its nearest competitor.

Jupiter said the larger companies were becoming so dominant it would be hard for start-ups to gain a foothold.

'Media companies competing for the attention of consumers must consider that while the key barrier to online entry and success used to be infrastructure, it has shifted dramatically to advertising and marketing,' said Mr Sinnreich.

AOL Time Warner and China PC maker Legend Holdings are expected to announce a US$200 million Internet joint venture in China that could prove formidable in a market dominated by three cash-burning incumbents still living off the proceeds of their Nasdaq initial public offerings.